SEC Charges Texas Resident in $12.3M Crypto Fraud Scheme Using Fake AI Trading Claims

The U.S. Securities and Exchange Commission (SEC) has filed suit against Nathan Fuller, a Texas resident, alleging he orchestrated a cryptocurrency investment fraud that netted approximately $12.3 million from roughly 150 investors through false promises of AI-powered trading profits.

According to the complaint filed in the U.S. District Court for the Southern District of Texas, Fuller operated via Privvy Investments LLC and associated business names including Privvy Investments and Gateway Digital Investments. He offered passive joint-venture interests in a purported crypto arbitrage operation from October 2022 through mid-2024.

The SEC alleges Fuller marketed proprietary AI trading bots as tools capable of scanning cryptocurrency markets, executing high-frequency arbitrage trades, and managing risk through stop-loss mechanisms. Investors were promised returns of 40% to 50% within 30 to 45 days, with some told they could earn over 100% in under a month.

The complaint states these claims were fraudulent. Only about $380,000—roughly 3% of investor funds—was actually used to purchase cryptocurrency, and those trades occurred without the advertised AI bots and yielded no profits. Instead, Fuller allegedly diverted at least $6.2 million for personal expenses, including a home purchase, gambling, travel, and vehicle acquisitions, while distributing approximately $5.5 million to investors as part of a Ponzi-style scheme.

As investor withdrawal requests increased, the SEC says Fuller generated fake account statements showing fabricated gains, referenced non-existent entities, and used AI-generated content to create a fraudulent letter from a supposed auditing firm claiming accounts were under review and would later be liquidated into a trust.

The SEC has charged Fuller with violating federal securities laws regarding registration and anti-fraud provisions. The agency is seeking permanent injunctions, disgorgement of ill-gotten gains, civil penalties, and a bar against future participation in securities offerings.

This case follows a separate bankruptcy proceeding where the Department of Justice successfully convinced a court to deny Fuller’s discharge of over $12.5 million in debt after he admitted to operating Privvy as a Ponzi scheme and fabricating documents, according to court records.

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